Canadian produce industry supports PACA-like financial protection legislation

Canadian industry associations are calling on members of Parliament to support Bill C-280, which would establish a critical financial protection mechanism — a deemed trust for fresh produce sellers in Canada.

On April 19 in the Canadian House of Commons, Member of Parliament Scot Davidson’s Private Member’s Bill C-280, the Financial Protection for Fresh Fruit and Vegetable Farmers Act, was tabled for second reading debate, according to a news release.

The legislation would help growers secure payment in the case of a buyer bankruptcy, according to a news release. The deemed trust would operate similarly to the Perishable Agricultural Marketing Act’s trust protection in the U.S.

Creating a deemed trust would not impose any additional cost to the government, but it would help to ensure that fresh produce sellers can continue to support local economies across the country and provide Canadians with safe, nutritious fruit and vegetable products, according to a release from the Canadian Produce Marketing Association, the Fruit and Vegetable Growers of Canada, and the Fruit and Vegetable Dispute Resolution Corporation.

The groups have called on all members of Parliament to "carefully consider the positive impact Bill C-280 would have on the fruit and vegetable sector and vote in favor of the legislation."

“We are very grateful to MP Scot Davidson for his hard work in bringing this important piece of legislation to the House of Commons,” CPMA President Ron Lemaire said in the release. “We know this is a busy time of the year on Parliament Hill, so we call on MPs to ensure its swift passage through the House. Consumers are very concerned about rising food costs right now, and Bill C-280 would contribute to more stable fruit and vegetable prices because it helps give produce sellers a financial backstop.”

The groups said the legislation is a critical opportunity for the government to support the fresh produce sector and safeguard Canadian food security.

The perishability of fresh produce, as well as the common industry payment terms, make it impossible for sellers to recoup money lost when a buyer goes bankrupt, the release said. The recent example of Ontario’s Lakeside Produce, which declared bankruptcy in January, demonstrates why a financial protection tool is needed to protect the produce sector and help preserve food security in Canada, the release said.

“Our members across the country are strong supporters of Bill C-280 and look forward to this bill being passed at second reading and moved on to committee stage for further discussions, debate and analysis,” Rebecca Lee, Fruit and Vegetable Growers of Canada executive director, said in the release.

Canadian leaders have been asking for a PACA-like payment protection program for more than 35 years ever since the PACA was established in the U.S. in 1985.

The PACA puts produce sellers first in line among creditors of a bankrupt firm. The issue has added urgency since 2014, when the USDA revoked the privileged status Canadian sellers had under the PACA because Canada lacked a similar program. Since then, Canadian firms that want to file a complaint against a PACA licensee must provide a surety bond before the complaint will be investigated. The bonds are twice the amount of the claim.